Gift cards are often used for money laundering and fraud, because they act as de facto currency but are not subject to the same regulations. I think the key is limiting the extent to which they can be used as currency, which is related to what you mention and what the article mentions.
I don't know that full Know Your Customer laws should be in force here with gift cards, but both Target and the bank that facilitates these transactions should be doing more to prevent these.
I can’t remember if it was here or Twitter, but there was a story on how gift cards were being used in an informal economy in US prisons. It was easy to transmit the required information and it didn’t violate internal prison rules about holding US currency.
I don't know that full Know Your Customer laws should be in force here with gift cards, but both Target and the bank that facilitates these transactions should be doing more to prevent these.